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CCCS your partner in education,counseling and
debt repayment
Money Management
Howard County Surviving The Recession
Consumer Credit Counseling Service of Maryland and Delaware, Inc.
CCCS your partner in education,counseling and
debt repayment
Overview My Background What will we cover How long is the presentation What are our goals for today Understanding Credit Handouts Questions and contact information
CCCS your partner in education,counseling and
debt repayment
CCCS OF MD & DE MISSION
To provide educational programs and implement financial solutions through counseling that promote self-sufficiency to individuals, families, neighborhoods and communities.
CCCS your partner in education,counseling and
debt repayment
CCCS of MD & DE Qualifications Founded in 1966 Licensed (first agency in MD #14-01, first agency in DE #07-01 District of Columbia does not require a license, licensed in VA.
Counseling Services offered in 34 states)
501 (c) (3) Non Profit Corporation COA accredited NFCC member All counselors certified thru the NFCC HUD approved BBB accredit EOUST Approved
CCCS your partner in education,counseling and
debt repayment
CCCS of MD & DE Services CCCS of MD & DE Services Budgeting Debt Management Plans Housing Counseling Pre-file Bankruptcy Counseling Pre-discharge Bankruptcy Education Financial Literacy Education
CCCS your partner in education,counseling and
debt repayment
What are your goals
Learn to become a better steward of your assets?
Learn how to budget? Buy a home? Save for retirement? Become a millionaire? Financial security for you and family? Do you have financial goals?
CCCS your partner in education,counseling and
debt repayment
Did you know?????? If you have a credit card balance of
$5000 and paid 2% minimum payment it would take 21.5 years to pay off
If you saved $4000 per year @ 10% average return for 30 years you would have $763424
The average return on the stock market history is approx 8.5%
CCCS your partner in education,counseling and
debt repayment
TEN RULE FOR FINANCES
Pay Yourself First Use direct deposit if possible Budget wisely Track your cash Stop impulse buying Do not overspend, make a list and stick to Do not covet your neighbor’s lifestyle, live
within your means Diversify – business, stocks, real estate Interview several financial advisors Review your credit reports on a regular
basis
CCCS your partner in education,counseling and
debt repayment
FINANCIAL FITNESS CHECKLIST
ARE YOU USING MORE OF YOUR INCOME TO PAY DEBT DO YOU MAKE ONLY MINIMUM PAYMENTS ON CREDIT CARDS ARE YOU NEAR YOUR CREDIT LIMITS ARE YOU PAYING BILLS WITH MONIES MEANT FOR OTHER THINGS DO YOU OFTEN PAY BILLS LATE ARE YOU DIPPING INTO YOUR SAVINGS TO PAY BILLS DO YOU HAVE A SAVINGS PLAN DO YOU PUT OFF VISITS TO THE DOCTOR DUE TO NO MONEY HAVE COLLECTION AGENCIES CALLED YOU LATLEY ARE YOU WORKING MORE THAN ONE JOB TO MAKE ENDS MEET ARE YOU BORROWING MONEY OR USING CREDIT CARDS TO PAY FOR
THINGS YOU USED TO BUY WITH CASH IF YOU OR YOUR SPOUSE LOST YOUR JOB, WOULD YOU BE IN
FINANCIAL TROUBLE RIGHT AWAY DO YOU WORRY ABOUT MONEY A LOT HAVE YOU FORGOTTEN TO DO A BUDGET OR A SPENDING PLAN
See CCCS CD ROM
CCCS your partner in education,counseling and
debt repayment
Preparing a spending plan
PAST Review your spending habits Understand how to spend and save Look at the last 3 months of
Cash spent Checking account Credit card usage
CCCS your partner in education,counseling and
debt repayment
How can I track my spending
PRESENT Write down all purchase Track your cash in a small book Track your checks written Track credit card usage Track fees in small book (ATM) Transfer to a computer for comparison Compare month to month
CCCS your partner in education,counseling and
debt repayment
A good spending plan can
FUTURE Reveal your financial condition Income vs. expense Establish financial direction Breaks down financial control and
direction Stop overspending Stop impulse buying
CCCS your partner in education,counseling and
debt repayment
Why Is a Spending Plan Important? Establishes financial controls Helps avoid overspending Budgets for emergencies Helps achieve Goals Controls impulse buying Helps in family discussions Helps your children understand
finances
CCCS your partner in education,counseling and
debt repayment
What do I learn fromtracking my expenses
Where money goes How much I eat out Entertainment Clothing Funding priorities Savings How much debt I reduced
CCCS your partner in education,counseling and
debt repayment
How can I track my spending Expense charts Write down all purchase Track cash in a small book Review checking account Review credit card purchases Track on a spread sheet all expenditures Compare month to month Place short and long term goals in highly
visible area for the family to see progress
CCCS your partner in education,counseling and
debt repayment
Expense tracking Track your Cash- Use a small book . Keep
it in your pocket and write down all cash, ATM charges on a daily basis.
Review your credit cards- Need, want or desire?? Review your spending habits. Are you living on them???
Review your checking account Count all three – Add all 3 together, this is
your spending level vs. your income Track monthly – track on computer, buy
software, take charge
CCCS your partner in education,counseling and
debt repayment
Counting your income
List your income Get a total disposable income
Total net income x 52 weeks spouse1 Total net income x 52 weeks spouse 2 Divide by 12 = monthly income Gives total income
CCCS your partner in education,counseling and
debt repayment
Income Job income Retirement income Child support Dividends/interest 3 year average bonuses, tips, commission Tax refunds Government program No overtime
CCCS your partner in education,counseling and
debt repayment
Budget analysis List monthly fixed expenses List monthly variable expenses Review for area to reduce
expenses Review area that needs to be
increased Define needs, wants and desires
CCCS your partner in education,counseling and
debt repayment
Budgeting SMART
A budget must be S = Specific M = Manageable/Moveable A = Attainable R = Reasonable T = Timely
CCCS your partner in education,counseling and
debt repayment
Budget Analysis Fixed Expenses Savings Housing Utilities Cable Internet phone Cell Insurance Food Car payment Gas Repairs Parking Transportation Laundry Medical Medicine Dental Loans Credit cards Lunches Tuition Childcare
Total
Variable Expenses Entertainment Restaurants Clothing Health clubs Pet care Charity/donations Emergency funds Vacations Bank charges Postage Other Cleaning services Babysitting Gifts _____________ _____________ _____________
Total
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities2) Cable3) Internet4) Phone5) Insurance6) Food7) Lunches8) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable3) Internet4) Phone5) Insurance6) Food7) Lunches8) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet4) Phone5) Insurance6) Food7) Lunches8) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone5) Insurance6) Food7) Lunches8) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone $605) Insurance6) Food7) Lunches8) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone $605) Insurance $206) Food7) Lunches8) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone $605) Insurance $206) Food $1507) Lunches8) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone $605) Insurance $206) Food $1507) Lunches $508) Entertainment9) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone $605) Insurance $206) Food $1507) Lunches $508) Entertainment $259) Restaurants
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone $605) Insurance $206) Food $1507) Lunches $508) Entertainment $259) Restaurants $100
CCCS your partner in education,counseling and
debt repayment
Reducing Daily Expenses
1) Utilities $402) Cable $803) Internet $404) Phone $605) Insurance $206) Food $1507) Lunches $508) Entertainment $259) Restaurants $100
10) TOTAL $565
CCCS your partner in education,counseling and
debt repayment
Save big when shopping Get a Sunday paper Review the on sale items Pre plan menu Shop Alone Don’t buy bulk, unless justified Make a list No impulse buying Use coupons Don’t go hungry Take an inventory of pantry and freezer
CCCS your partner in education,counseling and
debt repayment
Expense Allocation Chart
Housing 23-33%
Food 12-29%
Transportation 7-10%
Entertainment 4-6%
Savings 5-10%
Insurance, Medical 7-10 %
Church/Charity 5-10%
Personal Debt 8-18%
Clothing 4-7%
CCCS your partner in education,counseling and
debt repayment
Trick yourself to wealth I.R.S. refunds $2300 Save a Dollar a day $ 365 Coupon clipping $ 730 Cut $10 a week $ 520 Insurance deduct $50 $ 600
TOTAL $4515
6% x 20 years this equates to approx $300,000
CCCS your partner in education,counseling and
debt repayment
Compound Interest “ The most powerful force in the
world is compound interest”Albert Einstein
Insanity – doing the same thing over and over again and expecting different results
CCCS your partner in education,counseling and
debt repayment
Rule of 72 Rule of 72
A formula that shows you how long it takes to double your money
Example 72 divided by 4% interest rate = 18 years 72 divided by 6% interest rate = 12 years 72 divided by 12% interest rate = 6 years
CCCS your partner in education,counseling and
debt repayment
Rule of 72Year Rate of return 6%
1 $10,000
13 $20,000
25 $40,000
Year Rate of return 12%
1 $10,000
7 $20,000
13 $40,000
19 $80,000
25 $160,000
CCCS your partner in education,counseling and
debt repayment
Compound Interest Assumptions
$2000 per year X ten years = $20,000 Invested for 20 years 20 years the $20,000 is worth
$178,504
$4000 per year X ten years = $40,000 Invested for 10 years 10 years the $40,000 is worth $79,098
CCCS your partner in education,counseling and
debt repayment
Saving Money Fact If you saved $5.00 per week (with
no interest) you would save $5200 IN 20 Years
Rate Investment 20Yrs 30 Yrs 6% $5200 $9624 $20,924 8% $5200 $12268 $31039 10% $5200 $15,817 $47082
CCCS your partner in education,counseling and
debt repayment
10 Rules of Investing 1)Set clear goals 2)Know your finances well 3)Question Authority 4)Don’t be a follower 5)Be humble 6)Be patient 7)Use moderation in investing 8)Knowledge is power, know your investments 9)Don’t be a high risk taker, know your risk
tolerance 10)Don’t worship mere men
CCCS your partner in education,counseling and
debt repayment
Credit and Debt Management
“Today, there are three kinds of people: the have's, the have-not's, and the have-not-paid-for-what-they-have's.”
Earl Wilson
CCCS your partner in education,counseling and
debt repayment
Personal financial statement Assets
Checking/savings account
Accounts receivable Marketable
securities Pension/401k Real estate Vehicles/boats Furniture Total assets
Liabilities Accounts payable Loans Taxes Credit cards Real estate Misc debt
Total liabilities Net worth Total
assets/liabilities
CCCS your partner in education,counseling and
debt repayment
Debt to income RatioMonthly income
Take home pay, alimony, commissions,dividends, interest, other income
Minimum debt paymentsAuto payment, loan payments, credit cards, past medical care. (Regular monthly payments)
Payments divided by monthly income equals your debt to income ratio
SEE THE HANDOUT. HOW DO YOU STAND
CCCS your partner in education,counseling and
debt repayment
How is my debt to income ratio 0 to 10%
Excellent keep up the good work
10.1 to 19.9% Not bad, but as you approach 20% you are starting to place strain on your
budget
20 to 24.9%Your debt may already be a problem. Start a spending plan now even if this is temporary.
25 to 37%Immediately review your spending habits and develop a budget. Look for ways to cut spending now. Look at all options to reduce your debt
37.1% or GreaterGet counseling. Your ratio is way too high. Budgeting and tracking your spending are not options at this point. Debt Management programs may be a good alternative. ACT NOW!
CCCS your partner in education,counseling and
debt repayment
CREDIT REPORT CONTAINS YOUR FINANCIAL RESUME Personal Credit Accounts Public Record Inquiries SEE EQUIFAX REPORT (HANDOUT) FRAUD FREEZING YOUR REPORT
Pin code DISPUTING ITEMS LETTER (HANDOUT)
CCCS your partner in education,counseling and
debt repayment
OBTAIN YOUR REPORT Yearly from Equifax, Experian, and
Trans Union If denied credit Potential Fraud Free copy yearly starting in 2005
thanks to the Fair and Accurate Credit Transactions Act (FACTAct)
www.annualcreditreport.com
CCCS your partner in education,counseling and
debt repayment
What Is a Credit Report Record of how you have paid your
credit cards and other loans Credit report includes:
Identifying information
Credit informationPublic record informationInquiries
CCCS your partner in education,counseling and
debt repayment
How Long Do Items Stay On My Credit Report Most Items – 7 years from date of
last activity Bankruptcy – 10 years
CCCS your partner in education,counseling and
debt repayment
Credit Report Contact info
Get report Report fraudEquifax 800-685-1111 800-525-6285
Experian 888-experian 888-experian
Transunion 800-888-4213 800-680-7289
CCCS your partner in education,counseling and
debt repayment
What Is a Credit Score Used to predict the future of how likely an individual is
to repay a new loan based on experience with millions of consumers and previous credit history
Computer models calculate scores based on information contained in a credit report
Scores range from 350-850
Each creditor decides what credit score range it considers to be a good risk or poor risk
CCCS your partner in education,counseling and
debt repayment
How An Improved Score Can Save You Money Car Loan: 48 Mos. Loan Principal: $10,000 Current Score: 500-599 Improved Score: 690-719
Current Score Improved ScoreAv. Nat’l APR 18.4% 7.9%Monthly Pmt $295.84 $243.66Total Interest $4,200.64 $1,695.63
Savings on monthly pmt $52.18Savings over life of loan $2,505.01
CCCS your partner in education,counseling and
debt repayment
CREDIT SCORE* FAIR ISAACS CREATOR
* 350-850
* 10 SCORE CARDS
* PREDICTS FUTURE NOT PAST
* SUMMARY OF YOUR REPORT
* USED BY LENDERS
• DETERMINES YOUR LEVEL OF CREDITWOTHINESS
• QUALIFIES YOU FOR HIGHER/LOWER RATES
• DETERMINES INSURANCE RATES
• COULD IMPACT PROMOTIONS
CCCS your partner in education,counseling and
debt repayment
How Scores Are Calculated Credit Score breakdown
35% Payment History30% amount Owed15% Length of Credit History10% New credit10% Type of credit
CCCS your partner in education,counseling and
debt repayment
Bankruptcy Purpose: to provide new start to those
overwhelmed by debt with no means to repay
Intended to be a last resort
Bankruptcy filings often precipitated by job loss, divorce, illness, death in family
CCCS your partner in education,counseling and
debt repayment
Types of Bankruptcy Chapter 7 – provides for discharge for
all unsecured debt. Can only receive discharge once every 8 years
Chapter 13 – a 3-5 year repayment plan
Chapter 11 – for businesses
CCCS your partner in education,counseling and
debt repayment
Bankruptcy Continued Law change 10 2005 Means test Budget and Credit Counseling
Certificate Pre Bankruptcy discharge Certificate 60 months of payments, no free
rides
CCCS your partner in education,counseling and
debt repayment
Housing Issues Regular Sale – FSBO or Realtor Modification Refinance Short Sale – steps to be taken-what will I owe REO – what does it mean Foreclosure – what is the difference- what will I owe
Do Not Hide, Do not avoid, reduce stress be open, Understand your budget so you can talk knowledgably, seek
free counsel from CCCS. We are HUD certified to do housing counseling.
CCCS your partner in education,counseling and
debt repayment
Mortgage Crisis Where to turn for help
WWW.CCCS-inc.org
WWW>Makinghomeaffordable.gov
WWW.MDHope.org
CCCS your partner in education,counseling and
debt repayment
Mortgage Crisis Call Creditor Report suspicious companies Avoid Scams If they ask for a fee up front You pay them they will pay the
mortgage They can stop the foreclosure
CCCS your partner in education,counseling and
debt repayment
Monthly Mortgage Payments $ borrowed rate P&I Payment
180,000 6.5 $1138 200,000 6.5 $1264 220,000 6.5 $1390 240,000 6.5 $1516 260,000 6.5 $1642
Note: payment above does not include, Property tax, HOA, insurance.Under this analysis a $5000 increase in the amount financed will increase your payment by $31.50 P&I
CCCS your partner in education,counseling and
debt repayment
Projected Tax Savings $200,000 MTG @ 6.5%, 30 yr fixed
RENT BUY
Income $60,000 $ 60,000Standard deduction 5,000Interest Deduction 0 - $ 13,392Property tax 0 - $ 3500Taxable Income $55,000 $ 43,108
Tax Due (@35% rate) $19,250 $ 15,088 SAVINGS $4162 or $347 a monthNOTE THESE ARE PROJECTIONS ONLY,SEE YOUR TAX ADVISOR
CCCS your partner in education,counseling and
debt repayment
Avoid Predatory Lending Payday Loans – short term loans secured by post dated
checks. High interest
Pawn shops – hold personal property as collateral, high interest and may lose property
Rent-to-own – pay weekly rent on furniture or appliances. Become owner after time. Extremely expensive. Interest rates 120+%
Auto purchases, $35 per week
CCCS your partner in education,counseling and
debt repayment
SCAMS S= Secure, don’t give out your personal
information to others C = Check your credit report on a regular
basis A = Always get a free credit report,review
it and ask about mistakes M = Maintain good records and review
your credit cards statements closely
CCCS your partner in education,counseling and
debt repayment
FRAUD AND ID THEFT SCAMS SEND $6000 FOR 5 MILLION SCHREDDING YOUR DOCUMENTS SOCIAL SECURITY NUMBERS NO OVER THE PHONE NUMBERS PROTECT PIN CODES, PEOPLE ARE
WATCHING
CCCS your partner in education,counseling and
debt repayment
CREDIT REPAIR CLINICS KEEP AWAY FROM THEM HEAVY FEES FOR NOTHING PROMISES THEY DON’T KEEP IMPROVE SCORES, YOU CAN DO
THE SAME IF IT SOUNDS TO GOOD TO BE
TRUE IT ALMOST ALWAYS IS
CCCS your partner in education,counseling and
debt repayment
Expense reduction ideas Increase Insurance
deductible Insure only house not
land Unplug electric items Compare fees Shop Rates www.money.com www.bestrate.com Flatten toilet paper
Coupon clipping Florescent bulbs Review deductions
from pay Turn jarred items
upside down Ketchup/vinegar
Brass cleaner Stale potatoes chips Phones
CCCS your partner in education,counseling and
debt repayment
Expense reduction ideas Continued Reduce Fees Money pits
Big house Big cars Investment
properties Tight budgets
means less non essentials
Cable TV Lunches
Hot water heater cover
Seal duct seams Programmable
thermostat Seal drafty
windows and doors
Fuel additives
CCCS your partner in education,counseling and
debt repayment
Avoid Fees Over limit $39 Atm Fees $2.50 Foreign C.C. fees Late fees Bad deposit fee Checking Acct Fees Bi weekly payment
Car rental Ins Heavy bag fees Paper ticket fees Change flight fee Talking to Airline Gift card fee Hotel fees, internet,
resort fee, bell fees Broker fee
CCCS your partner in education,counseling and
debt repayment
Saving Web sites
Shopzilla.com Pricegrabber.com Sortprice.com Couponcabin.com Couponbug.com Edeals.com Couponmom.com Salescircular.com Dealnews.com Bilshrink.com (cells) Retailmenot.com(coupons Accuquote.com(home ins) Insurance.com(life) Insweb.com(auto) Myfico.com (credit score) Healthinsurance.com www.66ways.org www.energynear.gov
Gasbuddy.com Magazinepricesearch.com Smartbargin.com Annualcreditreport.com www.moneyanswers.com Ruelala.com Bluefly.com Overstock.com bigwords.com(text books) Gasprices.mapquest.com Energystar.com Gethuman.com(cust. Ser.) Kayak.com(travel) us.lastminutetravel.com Taxcalculatorkiplinger.com www.ssa.gov/estimator www.energysavers.gov http//tax-coalition.org/programs.cfm
CCCS your partner in education,counseling and
debt repayment
Websites Continued www.ftc.gov www.quickenonline.com www.livingto100.com www.bankrate.org www.kiplinger.com www.thestreet.com www.investinginbonds (bonds) www.morningstar.com ( stocks and funds) www.myfico.com (credit score) www.kiplinger.com (tax calculator) www.ssa.gov (Social Security Calculator) www.ehealthinsurance.com (health insurance) www.coverageforall.org (health insurance) www.medicare.gov (Medicare) www.accuquote.com (life ins) www.insure.com (life ins) www.insweb.com (auto ins) www.accucoverage.com (home ins) www.naic.org/cis (commissioner cust. service complaints for ins) www.makinghomesaffordable.gov
www.cccs-inc.org
CCCS your partner in education,counseling and
debt repayment
Contact InformationConsumer Credit Counseling Service of MD and DE, Inc.
Jim Harris 410-7472050 CCCS - 1-800 642 2227 CCCS Website www.CCCS-
inc.org Email - [email protected]
